Oil prices have gained 20% since January to just shy of $80 per barrel, a level not seen since 2014. Where is crude oil price headed?
It’s only a matter of before the benchmark Brent crude oil price breaks through $80 a barrel. Oil prices have gained 20% since January to just shy of $80 per barrel, a level not seen since 2014, Reuters reported on Thursday. What added fuel to the fire was the decision of US President Donald Trump to abandon the Iran Nuclear deal, unleashing uncertainty in a tight supply market. OPEC members and non-OPEC members led by Russia are cutting production to push oil prices up.
Where is crude oil headed?
Global investment banker Goldman Sachs had projected last week that with the US withdrawal from the Iran nuclear deal, the oil price would rise by about $6.20 per barrel to up to $83 a barrel. During the time, Brent was hovering above $77 a barrel. Oil price volatility will continue to increase, said Goldman Sachs in a note.
Morgan Stanley sees oil hitting $90 a barrel soon, and not because of either Iran and OPEC production cut. Bloomberg reported that Morgan Stanley’s analysts have reported that the Brent crude will reach $90 a barrel by 2020 as new international shipping regulations take effect, overhauling the types of fuels produced by refiners.
Bank of America Merrill Lynch recently said that given the geopolitical developments, crude oil could hit $100 a barrel by next year. But they warned that the market dynamics pushing the prices up could also unfold sooner than expected. A Reuters report quoting sources said that Saudi Arabia seeks to push oil price as high as $100 a barrel.
What’s most interesting of all is that crude oil hitting $300 a barrel is not impossible. Oil hedge fund manager Pierre Andurand believes that the reluctance of energy companies to invest in crude oil production could push oil price to $300 a barrel. He said that if prices do not rise fast enough presently, in future it could even hit $300.